Regulation
Gensler Criticizes Crypto Exchanges for Questionable Practices, Says ETH Spot ETFs Will ‘Take Some Time’
SEC Chairman Gensler expressed concern about unethical conduct within cryptocurrency exchanges, noting that the introduction of Ethereum spot ETFs will take additional time.
Gensler’s comments were made during a June 5 interview on CNBC, where he also answered questions from Jim Cramer about potential exchange-traded products for cryptocurrencies beyond Bitcoin and Ethereum.
Gensler criticizes cryptocurrency exchanges
Gensler said that while the SEC had approved After filing 19-4b for Ethereum spot ETFs last month, launching these products would “take some time.”
He explained that ETF applications undergo normal procedural reviews, which inherently take time, but they refrained from providing a specific timeline for their market debut.
However, Gensler soon turned his attention to the broader cryptocurrency market with a more critical perspective. He criticized widespread unethical practices within cryptocurrency exchanges, noting that the market is still plagued by fraud and manipulation.
“Cryptocurrency exchanges are engaging in practices that would never be allowed on the NYSE. Our laws do not allow exchanges to trade against their customers, yet this is happening in the cryptocurrency industry,” Gensler said, drawing a line between cryptocurrency exchanges and traditional ones like the New York Stock Exchange.
Referring to recent high-profile failures such as FTX and Celsius Network, Gensler said such illegal activities remain a major problem in the cryptocurrency market. He reaffirmed the SEC’s commitment to upholding market integrity through continuous enforcement measures and emphasized the agency’s role as a civilian law enforcement agency.
Gensler highlights regulatory gaps in the cryptocurrency market
While acknowledging some positive steps in regulation, Gensler expressed serious concerns about inadequate disclosure and regulation in the cryptocurrency industry.
“These tokens, whether well-known or obscure, have not provided the necessary information required by law,” he noted, noting that most cryptocurrencies do not meet the essential disclosure standards required for regulated assets. This lack of transparency, Gensler argues, deprives investors of crucial information needed to make informed decisions.
During the interview, Cramer also questioned Gensler about the possibility of ETFs for various lesser-known cryptocurrencies, including meme coins like SushiSwap (SUSHI) and Bonk (BONK), as well as other tokens like Cardano, Cosmos, and MyNeighborAlice. Cramer pointed out that these tokens have traded millions of dollars in recent activity, asking whether they too should have their own ETFs.
While Gensler didn’t provide specific answers, he underlined its stance on the inadequate disclosure of many crypto tokens, implying that these tokens are often unregistered securities.